First Time Buyers 'Will Need A Salary Of £106k To Buy A House In London'

James DruryFirst Time Buyers 'Will Need A Salary Of £106k To Buy A House In London'

First-time buyers will find their chances of owning a property in London diminishing even further. Photo by Angus Stewart from the Londonist Flickr pool.

First time buyers in London will need a salary of £106,000 and a deposit of £138,000 to get a property in 2020, according to figures from homelessness charity, Shelter.

This is over a quarter on the £80,000 needed for a typical first time buyer’s mortgage today, as average house prices are projected to rise to £558,000 over the next four years.

The charity's research shows over the last five years, the country's severe housing shortage has seen house prices rise 15 times faster than wages in London, and it is urging the next mayor to commit to building truly affordable homes.

The research looked at the salary and deposit needed for the average first time buyer today, and calculated what these would be in 2020 if they grew in line with the 23% increase in house prices projected by Prof Paul Cheshire (pdf).

Worst boroughs for wages vs prices

This map shows how many times house prices rose faster than wages over the past five years for each borough. In most of London, prices rose at least 10 times faster than wages. The bright red boroughs are Westminster and Lambeth, where prices rose, while wages fell.

People living in Westminster, Lambeth, Newham and Greenwich face the greatest disparity between wage growth and house price increases, according to the research.

In Westminster, average full time wages fell 7% from 2010-2015, while the average property price rose 67%. In Lambeth, wages have fallen 1%, while the cost of an average property rose 74% to £600,496.

Campbell Robb, Shelter’s chief executive, said: "When house prices are increasing 15 times faster than the average wage, it’s no wonder Londoners on ordinary incomes are being locked out of a home of their own.

"With the situation only set to get worse, Generation Rent will be forced to resign themselves to a life in expensive, unstable private renting, and wave goodbye to their dreams of a home to put down roots in.

"It doesn’t have to be like this. The next Mayor of London has the power to turn our housing crisis around, and with only weeks before Londoners go to the polling booth, the candidates must commit to investing in homes that people on ordinary incomes can actually afford and making renting more secure."

The only thing politicians should do is to forcibly decide on simple regulations to replace _every_ existing building regulation which will enable housing to be built much faster. The regukations should also force developers to build affordable and near-affordable housing _before_ they build whatever they are looking to build. It cannot take more than two weeks to get approval to build, and then that approval can then in return never ever be revoked, unless the developer fails to complete the project within a set time.

That is the _only_ way to actually solve the housing problem. This means that the spoiled minority of Londoners that already own a domicile within zones 1-3 will be unable to prevent housing from being built, and that is the only way forward.

A rent cap will _not_ solve the problem, it will in fact make things even worse, as it will create a shortage of legally available flats, and thus make it impossible to legally rent anything in London _at_ _all_, swiftly creating a black market that only the people with large sums of cash will be able to navigate, i e it will create a fast lane for criminals. This happens every time you try and apply a rent cap on a grossly undersupplied market. This is why most places with rent control only apply it to parts of the housing stock, creating little enclaves of weirdness. Again, this doesn't solve the problem, a partial rent cap would only make the remaining unrestricted landlords able to hike rents even more.